We recently compiled a list of the 10 Hot Growth Stocks to Invest in According to Analysts. In this article, we are going to take a look at where Atlassian Corporation (NASDAQ:TEAM) stands against the other hot growth stocks.
The big rally in the broader stock market might have ceased, but there are a lot of things to focus on under the surface, says Morningstar. Notably, technology stocks, which were the leading contributors to the big bull market in 2023 and 2024, have seen strong declines in 2025. Elsewhere, other sectors including financial services, basic materials, and healthcare continue to see new investor interest.
Morningstar, while highlighting the comment from Michael Arone (chief investment strategist at State Street Global Advisors), mentioned that non-US markets including China, the UK, and Germany have seen strong rallies. Notably, the market strategists continue to see a subtle transition in leadership. The broader markets have been struggling to find focus due to the uncertainties related to the future. The US Fed rate cuts are not guaranteed this year, while inflation remains sticky. Also, the potential impact of Trump’s economic policy proposals is unknown yet.
Is a Market Rotation on the Horizon?
To provide a brief perspective, when a rotation occurs, the market investors tend to shift their focus from stocks that were critical to a strong trend to other parts of the broader equity market that have not seen much movement. Morningstar believes that there is plenty of evidence that a rotation is underway. Technology stocks, which have seen an increase of over 36% in 2024, are down in 2025. The NASDAQ-100 Technology Sector has seen a decline of ~0.74% on a YTD basis.
The basic materials sector was the worst performing sector in 2024. However, so far in 2025, related stocks have managed to deliver decent gains. Dow Jones U.S. Basic Materials Index increased by over ~6% on the YTD basis. Also, healthcare stocks have grabbed investors’ attention after they returned ~2.7% in 2024, says Morningstar. Dow Jones U.S. Health Care Index returned over 7% on a YTD basis. As per Dan Kemp, Morningstar chief research and investment officer, there seems to be a rotation in terms of valuations.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
UBS Remains Optimistic About S&P 500 in 2025 Despite Challenges
UBS has reiterated the importance of portfolio diversification and hedging in a bid to navigate the market volatility moving forward. Investors are required to consider capital preservation strategies so that they can limit the portfolio losses. Investors looking to build up long-term AI exposure can use structured strategies or “buy the dip” strategy in certain quality AI stocks.
UBS expects 2025 capex from the Big 4 US tech firms to increase by 35% to reach US$302 billion, with the firm seeing strong demand for frontier models. Due to the AI adoption trends fueling monetization, it projects mid-teens returns for global AI stocks this year.
Our Methodology
To list the 10 Hot Growth Stocks to Invest in According to Analysts, we used a screener to shortlist stocks that have gained at least 30% over the past 6 months and that analysts see at least 20% upside to over the next 12 months. Next, we ranked the stocks in ascending order of their average upside potential, as of March 5. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A group of executives in a board room discussing the latest software innovation.
Atlassian Corporation (NASDAQ:TEAM)
% Gain Over 6-Month Period: ~55.3%
Average Upside Potential: ~41.6%
Number of Hedge Fund Holders: 75
Atlassian Corporation (NASDAQ:TEAM) is engaged in designing, developing, licensing, and maintaining various software products. Keith Weiss from Morgan Stanley reiterated a “Buy” rating on the company’s stock, with a price target of $315.00. The analyst’s optimism around the company’s prospects is supported by Atlassian Corporation (NASDAQ:TEAM)’s expanding market opportunities throughout several large sectors, together with significant potential for cross-selling and upselling as a result of a broadened range of solutions and a more focused go-to-market strategy. Furthermore, the ongoing migration from Data Center to Cloud, together with the company’s strong pricing power, continue to paint a favourable outlook for the company.
The expected operational efficiency gains, mainly with the internal use of Gen AI to fuel developer productivity, are some of the growth enablers. Elsewhere, Barclays analyst Ryan MacWilliams upped the price objective on Atlassian Corporation (NASDAQ:TEAM)’s stock to $350 from $275, keeping an “Overweight” rating. The firm believes that investors can gain more confidence in Atlassian Corporation (NASDAQ:TEAM)’s medium-term revenue growth algorithm considering management’s optimism around customer desire to increase their spend with the company and higher interest in committing to a cloud migration.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Among our top Q4 contributors were Atlassian Corporation (NASDAQ:TEAM), Spotify and Marvell Technology. Atlassian provides collaboration and productivity software tools—a large, structurally growing addressable market that is expanding from the core software developer market to a much larger “knowledge worker” market. Along with much of the software industry, the company went through a period of weakness as small and medium-sized businesses pulled back spending due to macroeconomic concerns, and enterprise IT spending shifted toward AI projects at the expense of traditional cloud software offerings. However, shares rallied after earnings results beat expectations and showed signs of a turnaround, including higher-than-expected paid seat expansion.”
Overall TEAM ranks 5th on our list of the hot growth stocks to invest in according to analysts. While we acknowledge the potential of TEAM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than TEAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.